The Primary Purpose of Portfolio Diversification Is To

question 376

Multiple Choice

The primary purpose of portfolio diversification is to:

• A) Increase returns and risks.
• B) Eliminate all risks.
• C) Eliminate asset-specific risk.
• D) Eliminate systematic risk.
• E) Lower both returns and risks.

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Definitions:

Service Departments

Units within an organization that support other departments but do not directly contribute to revenue generation, such as human resources or IT services.

Market Value

The current price at which an asset or service can be bought or sold in a marketplace.

Split-off

A point in the production process in a joint production system where two or more products become individually identifiable and their costs can be separately allocated.

Production Work

The tasks and activities involved in manufacturing products, including assembly and processing materials.